Singapore Issues Revised REITS e-Tax Guide

The Inland Revenue Authority of Singapore has issued a revision to its e-Tax
guide that explains the income tax treatment for a real estate investment trust
(REIT).

The guide, which will be relevant to the trustee, manager, unit holders or
potential investors in a REIT, confirms that Singapore's Comptroller of Income
Tax (CIT) will accord tax transparency treatment to a REIT on income distributed
by the trustee, subject to certain conditions.

To enhance Singapore's tax regime for REITs, it was announced in Budget 2012
that from April 1, 2012, REIT distributions made to unit holders will not be
taxed in the hands of the trustee of the REIT, but will only be taxed in the
hands of the unit holders, unless the unit holders are specifically exempted
from tax.

However, the trustee of a REIT has to apply to the CIT to enjoy the tax transparency
treatment. Thus far, all applications are by way of advance ruling. With immediate
effect, the trustee/manager of a proposed/newly constituted REIT or its sponsor
needs only to submit an application form.

The tax transparency treatment is subject to the condition that the trustee
distributes at least 90 percent of its taxable income to the unit holders in the same
year in which the income is derived by the trustee.

On the other hand, the trustee of a REIT is taxed at the prevailing corporate
tax rate on its income that does not qualify for tax transparency treatment.
For example, income derived by the REIT but not distributed to the unit holders
in the same year in which the income is derived; and other income, including
gains from the disposal of any investments such as shares, which are determined
by the CIT to be revenue gains chargeable to tax.

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